Cars and their prices… competition or monopoly?

Almost all global research centers and specialized periodic economic reports unanimously agree that 2020 is the most severe year for the global automotive sector, with production halted due to the spread of the COVID-19 pandemic, then the subsequent problem of shortage of automotive semiconductors, and this shortage of chips led to Global production declined by about 11.3 million cars in 2021 and to a shortage of about seven million cars in 2022, although global car sales reached 66.7 million units sold in 2021, and growth continues until 2023, but it will remain less than 2019.
The main reason for the decline in the number of manufactured cars worldwide, and their inability to return to 2019 production levels, is due to the shortage of car chips, and this is not limited to the final assembly stations, but even with the manufacturers of basic equipment, as they can no longer purchase sufficient quantities. of chips, and the war in Ukraine exacerbated the aches and pains of the semiconductor supply chain and then the auto industry, as Ukraine provides 25 to 35 percent of the neon gas, and Russia supplies 25 to 30 percent of the palladium, both of which are an important part of the semiconductor manufacturing process. Connectors, in addition to these reasons, there are changes in global demand, as electric cars, EVs and hybrids, have begun to witness strong growth and enter strongly into the circle of competition.
According to international reports, sales of electric cars (including hybrid and fully electric cars) doubled in 2021, setting a new record of 6.6 million. : triple the number in 2018. It is expected to exceed sales of electric vehicles in the market, with a growth of about 48 percent in 2022 to reach 9.4 million units globally.
All these fluctuations witnessed by the automotive sector in the world are understandable fluctuations, and they are almost inevitable, and they are among the regular risks that afflict the market, and everyone who deals with this sector must accept these fluctuations, but despite this clear fact, the meeting of the Trade and Investment Committee raised In the Shura Council with representatives of the Ministry of Commerce, questions about the role of the ministry, the procedures followed, and the expected time plan to deal with the delay of car agencies in delivering them to customers and the high prices. The new cars, despite their reservation and waiting for periods that exceed a few months, with the availability of these imported cars by local agents and constantly in showrooms and showrooms selling cars at inflated prices much higher than the selling price of agencies, where the increases were monitored in varying proportions, which means that the problem did not exceed the regular risks that we mentioned. To it and related to the global market and its fluctuations, but there have become preferences in customers, and implicit agreements to raise prices, dry up sources, and issues related to weak transparency regarding delivery dates and non-compliance with them, and this increases market confusion, and may create an unregulated black market, which violates the fairness of competition , and consumer rights, and what confirms the existence of these phenomena is what was issued by the Board of Directors of the General Authority for Competition in June (June) 2022 to study the structure of the car sales sector, after-sales services and auto spare parts, and the impact of the behavior of the establishments operating in the competition, in order to submit them to the competent authorities according to the procedures followed. At that time, the Council also issued its decision approving taking procedures for investigation, research, collection of evidence, and investigation into the possibility that a number of car companies, agents, showrooms, and related parties might violate any of the articles of the Competition Law and its implementing regulations.
The Ministry of Commerce also issued a statement in April 2022, regarding the investigation into giving car agencies the preference to sell new cars to car distributors and showrooms, and delaying the delivery of cars to consumers, then the Ministry announced in May 2022, that it became clear that long lists of reservations had accumulated in addition to The high prices of some types of cars and the delay in delivering some orders to consumers. The Ministry has taken a number of measures, including the Ministry of Commerce’s communication with manufacturers to increase the share allocated to the Kingdom of the most demanded cars in the local market, giving car dealerships to individual consumers priority in providing the most demanded cars, and reducing the proportion of cars Dedicated to distributors and showrooms, monitoring distributors and showrooms to ensure that there are no infringing practices and harmful to consumers in selling cars, raising their prices and imposing penalties against violators, governing reservation lists at car agencies, and enhancing transparency by giving consumers reservation numbers linked to the ID number and accurately determining priority in car reservation lists, and from That obliges car dealerships to disclose prices, policies, instructions, and procedures related to the mechanisms of “purchase, car reservation, listing on reservation lists, car delivery, periodic maintenance, and communication channels designated for receiving inquiries and complaints” on their websites, and stopping car rental companies from selling new cars, taking advantage of the high prices. .
All of these measures, followed by market observations, were aimed at addressing the delay in the delivery of cars to consumers and preventing the phenomenon of giving preference to selling to car dealers and showrooms, but with the Shura Council returning to discussing this issue even after a full year has passed since these procedures, this indicates that the phenomenon still exists and does not Consumers still suffer from prices, drying up of sources, and preference for distributors. Therefore, questions remain regarding the effectiveness of these measures, the agencies’ commitment to them, and whether the issue is related to competition and the existence of oligopolistic phenomena, or whether the agreement on prices requires the imposition of fines on these agencies and distributors as a result of violating the competition system.